PM Daily Market Commentary – 11/21/2016

PM Daily Market Commentary – 11/21/2016

Gold rose +6.70 to 1214.00 on moderate volume, while silver rose +0.03 to 16.68 on moderately heavy volume. The first down day for the buck in 11 trading sessions provided a faint ray of hope that the relentless rally in the dollar may be running out of steam.

Today, gold moved steadily higher in Asia, peaked at around 07:00 Eastern, and then headed slowly lower into the close in NY. In general gold seemed to have a reasonable bid underneath it today, which seemed to improve whenever the dollar weakened.

Today’s candle print was a “short white” candle; the new candle code thinks that’s a 32% chance of a low. Today’s move was not enough for a swing low, but I suspect if the dollar puts in a top tomorrow, we’ll see one in the near future.

December rate rise chances are unchanged at 95%.

Gold open interest at COMEX rose +6,063 contracts.

Silver tried to rally today but largely failed, and the candle print was both a “doji” and a “spinning top.” The new candle code wasn’t impressed, giving silver a sub-10% chance of printing a low. Silver has been underperforming gold for the past 7 trading days, with the gold/silver ratio closing today up +0.52 to 73.23. On the longer term weekly chart, the steadily rising ratio has paralleled the drop in PM prices which peaked immediately after BRExit in early July. My sense is, we can’t expect any major PM rally to occur as long as that ratio continues to climb.

The miners gapped up because of the gold rally, tried to move higher, fell back, and then traded sideways for the rest of the day. GDX ended up +2.04% on moderate volume, while GDXJ climbed +2.14% on moderately light volume. Candle print was a doji, and a two-candle swing low, which the code rated as particularly weak, giving it just an 18% chance of printing a low. Normally swing lows are pretty strong indicators; just not this one.

Platinum rose +1.8%, palladium fell -0.17%, while copper rose +2.18%. Copper is moving back up again; on the chart, copper is riding its 9 EMA higher. Pretty as a picture.

The USD ran into some trouble today, falling -0.18 to 101.03. This was the first down day in the past 11 trading days. However, the candle print was just a spinning top, which the candle code says is not bearish at all (sub-10% chance of being a top). Hmm, that’s not good news for gold. Looking at the charts of the other major currencies, none of them appear to be putting in a low just yet.

Crude climbed relentlessly higher today, up +2.07 [+4.52%] to 47.90. Today’s move seemed to be driven by optimism that OPEC would reach some sort of production agreement – part of this was a series of comments from Russia’s President Putin who said that Russia was ready to freeze production at current levels, and who also opined that most of the big sticking points between the major producers have been hammered out. Oil printed a two-candle swing low which the candle code finds very bullish – around 92%. Also, from the COT perspective, managed money is “offside short” – at the same time the commercials are heavily long. To me, this is a recipe that will probably lead to a re-test of the 52 highs within the next week.

SPX rose +16.28 to 2198.18, breaking out to a new all time high. (That’s gotta be worth a “woohoo!”). Today was entirely about commodities and that good-sized move in oil; energy was the star (XLE:+2.38%) backed up by materials (XLB:+1.18%), with sickcare (XLV:-0.36%) bringing up the rear. New all time highs for DJIA and RUT also. VIX fell -0.43 to 12.42.

TLT rose +0.30%, printing a “bullish harami cross” – a 25% chance of a low here. TLT is showing signs of a bullish divergence in the RSI, which suggests the downside momentum is slowing down. No swing low just yet, but maybe the worst of the selling is over.

JNK jumped higher, up +0.84%, moving back above its 9 EMA. JNK probably liked the oil rally. JNK remains in a downtrend, although it is seriously outperforming the higher quality treasury debt. You can see this in the JNK:IEF ratio, which continues to climb.

CRB leapt higher today, up a big +2.28%; the move was not all about energy, however. Four of the 5 commodity groups did quite well. On the longer term weekly chart, CRB bounced off its 50 week MA and is now rising perhaps to test its recent highs.

Right now, it seems as though all the excitement is in oil, with PM the poor stepchild. When the money isn’t flowing in, you won’t get much of a bounce even after price has dropped significantly.

Potential drivers could be that Italian referendum, especially if Renzi lives up to his promise and resigns. I’m sure the pressure on him will be immense to stay “for the good of the EU.” I’m 0 for 2 at handicapping these things, so I’ll learn from past failure and just watch from the cheap seats.

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